Your taxes are done – great. You owe money – not so great. You don’t have the money – bad … or is it? The IRS offers several options to help taxpayers in such a scenario. If you owe the IRS, don’t ignore it. Avoidance could cost you even more money in the long run. In fact, the longer you wait, the more interest and penalties you may incur. Read the following tips for ways to help you avoid those extra charges:
- Pay monthly. For most individuals and some small businesses that can’t pay all at once, you can apply online for a payment agreement on IRS.gov or use Form 9465. Alternatively, you can call the IRS at 800-TAX-FORM (800.829.3676).
- Check out a direct debit pay plan. A direct debit pay plan is a hassle-free way to pay with money automatically withdrawn from your bank account. There are no reminder notices from IRS, no missed payments and no checks to write and mail. You can choose from short-term and long-term options, and some fees may apply.
- Consider an Offer in Compromise. An Offer in Compromise allows you to settle your tax debt with the IRS for less than the full amount. This may be an option if you are unable to pay your full tax liability or is doing so will create a financial hardship.
- Pay electronically. If you won’t have the money until the last minute, use an IRS electronic payment option is quick, accurate and safe. Options include
- IRS Direct Pay*
- Credit or debit card
- Electronic Federal Tax Payment System
Keep in mind that Direct Pay and EFTPS are free services while there are usually fees with credit or debit card processing.
*Direct Pay is a 24/7 service that allows taxpayers to pay their tax bill or make estimated payments directly from their checking or savings accounts without any fees or pre-registration.
The IRS is not out to get you, which is why there are options to help you pay your tax burden. If you do have the money and don’t pay electronically, you can pay by check or money order. Make your check or money order payable to the U.S. Treasury and be sure to include:
- Your name, address and daytime phone number
- Your Social Security number or employer ID number if business tax
- The tax period and related tax form, such as “2017 Form 1040”
- Mail it to the address listed on your notice. Do not send cash in the mail.
- Find out more about the IRS collection process on IRS.gov.
As always, discuss your options with your tax specialist or email Rea & Associates to learn more. Also, be sure to take advantage of tax planning with your account to find out ways you can lessen your tax burden for next year.
By Michelle Albro, CPA (Amherst office)